Undertaking various procedures will help you identify good from bad business opportunities or, worse yet, scams.

Procedures with the merchant offering the business opportunity

Ask the merchant:

• for the names of at least 3 satisfied franchisees or distributors with whom you could meet;
• for its most recent financial statements, checked by an accountant. Beware if the merchant refuses to provide them to you or if its profits are generated primarily from the contributions of its “associates” than the sale of products;
• for the names of its principal directors to check whether they are known by the individuals and organizations you will be consulting;
• for proof about the effectiveness and safety of the product, such as certification from a scientific laboratory;
• whether it holds product liability insurance. If the product is unsafe, this insurance could protect you against liability for an injured customer.

Procedures with professionals

You can ask an accountant to study the financial statements and get his or her opinion on the financial health and reliability of the business. It would also be prudent to ask an attorney or a notary to study the contract before you sign it. You could make sure that there is a fair share of responsibilities between you and the business.

Procedures with public bodies

Certain public bodies can provide you with information on the business. You can consult:

• the website of the Registraire des entreprises to find out how long the company has been in business and the names of its directors;
• an industrial development advisor at one of the directions régionales de l’Économie et de l’Innovation (in French only);
• the website of the Québec Commercial Certification Office. If the business is a member, you can get information about its commercial practice record.

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